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Danish banking sector continues to struggle as a bigger band swallows a smaller one

Monday, 05 November 2012
Danish bank, Sydbank takes over Tønder Bank's banking activities, including employees, approximately 18,000 customers, real estate and other assets, but not hybrid capital, or so-called supplementary capital.

This is because Tønder Bank has persistently failed the stress test to operate banking activities in Denmark and in a press release, the bank accepted that it has to throw in the towel and give up.

Sydbank said that Danish Financial Supervisory authority, after an inspection, has concluded that impairment needs for Tønder Bank is so large that the bank would not survive as an independent bank in the future if these impairments would be made.

Total assets in Tonder Bank is referred to stand at Dkr2.3 billion. Sydbanks total assets at September 30, to Dkr154 billion, according to the latest quarterly report.

The bankruptcy of Tonder Bank is said to have serious consequences for the Danish banking sector. The conclusion drawn by several experts, is that the crash bring serious doubts about whether they can trust the accounts of the banks which have not been visited by Danish financial services authority, writes the Danish Daily, Jyllands Posten.

The newspaper's review shows that 30 banks have not yet been visited by Danish FSA in over two years. This applies to banks from the small saving banks such as Fano Sparkasse to the sixth largest, Spar Nord Bank.

The management of Tonder Bank over the week end was harshly criticised by the Danish the Banking Association and Finance Council, which assesses its management as incompetent.

Since the economic crisis of 2008, Danish banking sector has suffered a lot. Many have gone under and the few that stand are struggling bad debts - much of the money borrowed to farmers who saw their yield performed poorly or the prices of their products fell in the market.
By Scancomark.com Team

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